Agenda item

This report is to update Cabinet on progress with the Freeport East Programme, and to recommend the approval of the Freeport East Ltd annual business plan for 24/25 and the Retained Business Rates Strategy.

The Council is one of the Founding Members of Freeport East Ltd, the company established to deliver the Freeport, including the collection and spending of Retained Business Rates.

The Portfolio Holder for Economic Growth, Regeneration & Tourism was appointed as a company director for Freeport East Ltd. The annual business plan has been approved by the company directors at the last board meeting (March 2024), along with the Retained Business Rates Strategy, but still requires Founding Member approval as set out in the Members Agreement. If approved by the Founding Members it will become the Business Plan for the Company.

The report also outlines the proposal for appointing an Alternate Director of the Company in accordance with the Articles of Association.

RESOLVED that Cabinet –

(a)    approves the Freeport East annual business plan for 2024/25;

(b)   delegates authority to the Leader of the Council to approve future annual business plans on behalf of Tendring District Council as a Founding Member of Freeport East Ltd.;

(c)   approves the appointment of Lee Heley, Corporate Director (Place and Economy), as the Council’s Alternate Director of Freeport East Ltd., as nominated by the Portfolio Holder for Economic Growth, Regeneration & Tourism who is the Council’s main Director on the company;

(d)   approves Freeport East Ltd.’s Business Rate Relief Strategy (Local Growth and Investment Strategy); and

(e)   notes the progress that has been made with the Freeport East programme.

Earlier on in the meeting as detailed under Minute 4 above, Councillor I J Henderson had declared an Other Registrable Interest insofar as he had been appointed to the Board of Freeport East Ltd on behalf of TDC. The Monitoring Officer (Lisa Hastings) following the principles within Section 33 of the Localism Act 2011 and in accordance with Paragraph 9.1 and paragraph 6 of Appendix B of the Tendring District Council’s Members Code of Conduct, had decided it was appropriate for the Cabinet Member appointed to the Company to have to a dispensation to be able to present the item, take part in the debate and vote on the item.

Cabinet considered a detailed joint report of the Leader of the Council and the Economic Growth, Regeneration & Tourism Portfolio Holder (A.1), which updated it on progress with the Freeport East Programme, and which also recommended the approval of the Freeport East Ltd annual business plan for 2024/25 and the Retained Business Rates Strategy.

Freeport East

Cabinet was aware that Freeport East was a Government backed hub for investment, trade and innovation. It was central to the Government’s agenda for driving clean growth, promoting regeneration and job creation to level up communities. Freeport East included the Port of Felixstowe and Harwich International Port, and the Gateway 14 site in Stowmarket, Suffolk. It comprised 275 hectares of space and facilities across three sites eligible for tax relief (”Tax Sites”) at Felixstowe dock, Bathside Bay in Harwich, and Gateway 14 in Stowmarket.

Members were reminded that Freeport East Ltd had been incorporated as a Company Limited by Guarantee in December 2022. It had been established by a range of local public and private partners, to act as the main counterpart to Government, for delivery of the Freeport policy for Freeport East. Tendring District Council was one of the Founding Members of Freeport East Ltd.

Cabinet recalled that it had previously approved the appointment of Councillor Ivan Henderson as a Freeport East Company Director, but to date it had not appointed an Alternate Director. The Company’s Articles of Association stated that any public sector director of the company could appoint an alternate who was an officer or employee, or an elected member. Any appointment or removal of an Alternate must be effected by notice in writing to the Company signed by the Appointor. The Board was responsible for registering any alternates at Companies House.

To that end it was proposed that the Alternate Director be Lee Heley, Corporate Director (Place and Economy). If agreed by Cabinet this would be submitted in writing by Councillor Henderson to the Company.

Business Plan

It was reported that Freeport East Ltd had produced a draft annual Business Plan. The Business Plan set out the key priorities for the year (e.g. developing a high performing organisation; delivering an ambitious vision for Freeport East; delivering investment; and making the most of its visibility and voice), and how it would deliver them, including the types of activities they would pursue, and the resources needed to deliver those. It also set out a high-level summary of key achievements for 2023/24, its first year of operation. The Business Plan was supported by a range of more detailed operational documents.

Cabinet was reminded that the Business Plan needed to be approved by the Founding Members, as set out in the Members’ Agreement. Once the Business Plan was approved, Freeport East intended to publish the final version on their website as an important means to convey to the wider public the scope of what they were delivering.

As well as setting the direction for the organisation, the Business Plan also created a framework for expenditure that could be followed internally. Freeport East Ltd cost in the region of £1.25m per year, funded originally through Government grant but now through the business rate income as set out in the Retained Business Rates Strategy.

It was noted that the £1.25m included a slight increase in head count for the central Freeport East team. That increase had been requested by central Government, who wanted all Freeports to be able to demonstrate their capacity to deliver against Government objectives, and it had been one of the conditions attached to the announcement in the Autumn Statement that had extended the tax reliefs from five to 10 years. (The other conditions included evidence of progress on the tax sites.)

Retained Business Rates Strategy (Local Growth and Investment Strategy)

Cabinet was informed that, in addition to the Business Plan, Freeport East, in consultation with partners, had developed a ‘Retained Business Rates Strategy’ (Annex 2) that set out how Freeport East would pool, allocate, spend and monitor the retained business rate income that was collected on the Freeport tax sites over the next 25 years. (This included the company’s operational costs.) It was proposed to be renamed the Freeport East Local Growth and Investment Strategy in order to give it more relevance to a public audience.

Members were made aware that the Strategy had been approved by the Board in March 2024, subject to an amendment, which would include additional wording on page 20: “Reflecting this principle in the case of Bathside Bay specifically, and to fully reflect the intent of decisions made by Tendring District Council in relation to business rates usage and to achieve the site developments envisaged in the Full Business Case, 70% of the total retained business rates from the Harwich tax site are planned to be allocated to support the development of the Harwich tax site to achieve the outcomes of the Green Energy Hub.”

As a result, the Freeport East’s ‘Business Rates Strategy’ would align with this Council’s final’ Freeport East Policy for Managing Retained Business Rates’, which had been approved by Cabinet in January 2023.

Cabinet was advised that the Strategy was intended to be a single point of reference and a decision-making framework for the Freeport East Board on all retained rates matters going forward. It also guided Tendring District Council and the other Billing Authorities in terms of how business rates they collected (directly from the tax site occupiers or as rebates from HMT) would be used to support the Freeport initiative and Levelling Up, such as business support, skills and infrastructure (“pot c”) which Tendring would benefit from. The Strategy also sets out how funds would be allocated to the tax sites, including helping fund the delivery of Bathside Bay (“pot b”).

It was stated that this Council remained firm that it would not borrow without collateral to lend against future rates on the Bathside Bay site to the benefit of Hutchinsons Ports UK. The Council was however content to pass on business rates to Freeport East if and when they came in from the tax site, in accordance with the Retained Business Rates Strategy. Separately the Billing Authorities, would be considering putting in place a Business Rates Agreement which would ensure there was clarity around forecasting, collection and management of business rates funds in a manner that was consistent with the Retained Business Rates Strategy.

Update on progress

Planning Bathside Bay (Harwich Tax Site)

It was reported that Hutchinson Ports had submitted their application for the temporary (15 year) Clean Energy Hub at Bathside Bay to Tendring District Council on 8 November 2023. That planning application had been approved by the Planning Committee on 14th May 2024. This followed extensive discussion with Natural England to address their previous holding objection.

The application was for the temporary use of Bathside Bay Container Terminal permitted under planning permission 10/00202/FUL dated 14 February 2013 as varied by permission 21/01810/VOC dated March 2022 (BBCT Permission) for wind turbine storage, staging, marshalling and assembly including the import and export, handling and deployment of concrete substructures, moorings, anchors and array cables and other related offshore green energy paraphernalia followed by decommissioning to enable continuation of container terminal use under the BBCT Permission.

Clean Energy Innovation Cluster in Harwich (Opergy Report)

Members recalled that Opergy had been commissioned by the University of Essex, and funded through Tendring’s UK Shared Prosperity Fund, to identify opportunities for Harwich to evolve into a centre for clean energy innovation. The report, launched in December 2023, outlined the vision, actionable recommendations, and the rationale behind creating an innovation cluster in Harwich.

The report provided an opportunity for the Council, the University of Essex and Freeport East to promote an innovation centre to funders in a two-phased approach with a pop-up interim solution whilst planning for a permanent innovation hub. The partners had now formed a working group to take the project forward, and the creation of the Innovation Cluster was one of the priorities outlined in the Freeport East Business Plan.

Seed capital

Cabinet was advised that the £7m seed capital for Bathside Bay was expected to come forward in the summer, and that proposals would be subject to a full business case and Green Book standard appraisal to ensure it was the best use of public funds.

It was felt that:-

(i)     approving the Business Plan would allow Freeport East to operate with a framework of expenditure and report back against the priorities set for the year. It also would allow Freeport East to publish the business plan and to be open and transparent about how the business rates were being used to meet the objectives of Government and local partners;

(ii)    by appointing an Alternate Director, the Council could ensure that it had sufficient cover for future Board meetings; and

(iii)   approving the Retained Business Rates Strategy would ensure that there was a robust process by which the business rates were allocated, helping to achieve the Freeport East objectives, which in turn would ensure that local people benefited from the Freeport. Having an agreed and published Strategy was a stipulated Government condition of all Freeports.

It was moved by Councillor I J Henderson, seconded by Councillor M E Stephensonand:-

RESOLVED that Cabinet –

(a)    approves the Freeport East annual business plan for 2024/25;

(b)   delegates authority to the Leader of the Council to approve future annual business plans on behalf of Tendring District Council as a Founding Member of Freeport East Ltd.;

(c)   approves the appointment of Lee Heley, Corporate Director (Place and Economy), as the Council’s Alternate Director of Freeport East Ltd., as nominated by the Portfolio Holder for Economic Growth, Regeneration & Tourism who is the Council’s main Director on the company;

(d)   approves Freeport East Ltd.’s Business Rate Relief Strategy (Local Growth and Investment Strategy); and

(e)   notes the progress that has been made with the Freeport East programme.